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Bentley still weighing tax proposal, hopes legislators remember whose coattails they rode into power

Alabama Gov. Robert Bentley
Alabama Gov. Robert Bentley

MONTGOMERY, Ala. — After securing a landslide re-election victory, Alabama Gov. Robert Bentley went from running on a “no new tax” campaign platform to declaring that “everything is one the table” — including higher taxes — when it comes to patching the $260+ million hole in Alabama’s General Fund Budget.

“We’re going to be raising revenue,” he said recently. “Our goal is to raise revenue. We have to raise some revenue.”

But now, on the eve of his second inauguration, Bentley is prepared to take at least one of his tax increase options off the table. He told Fox 10’s Bob Grip on Sunday that he “doubts” he will push to revoke Alabamians’ ability to deduct the amount they pay in federal income taxes from their state income taxes.

“We have talked about that in the past.” he said. “(T)hat would cost a lot of people a lot of money. It really would be a fairly sizable tax increase and I doubt that I will add that one.”

Bentley had previously floated that idea along with the possibility of eliminating the deduction for FICA payments — the 7.65 percent from employees’ paychecks that goes toward Social Security and Medicare.

According to Legislative Fiscal Office calculations cited by the Birmingham News, eliminating those two deductions could bring in an additional $694 million annually, but the concept was met with a firm “no” from House Speaker Mike Hubbard, who said that eliminating the federal income tax deduction “would basically require individuals to pay state taxes on their federal taxes, which is money they never even received.”

The tension between the Legislature and the Governor’s office over the possibility of raising taxes — or “revenue” as the administration has often referred to it — began with a speech Bentley delivered during the Legislature’s new member orientation.

Bentley urged legislators to follow his lead, noting that he would not have to face re-election again. “Don’t cower away from the difficult things we’ve got to face,” he said.

Lawmakers expressed optimism that the moment to find a longterm solution to the state’s budget woes may have finally come, but were dismayed at the prospect of raising taxes because they, unlike Bentley, will have to face the voters again in four years.

They were particular concerned about being asked to raise taxes in 2015 after having just declared 2014 the “Year of Taxpayer Relief.”

With bills such as the Small Business Tax Relief Act, the Business Tax Streamlining Act, the Tax Elimination Act and the Taxpayers’ Bill of Rights, 67 percent of the bills on the 2014 Alabama House agenda were either a tax credit, a tax cut or an attempt to otherwise ease the tax burden on individuals and small businesses.

Realizing that some of the proposals he’s been floating recently will be a tough sell to an increasingly conservative Legislature, Bentley told the Birmingham News he’s got his sales pitch ready. He said that he doesn’t expect them to vote against their districts, but hopes they’ll remember whose coattails they road into power.

“I (helped) some of our Republicans win and I am counting on them to remember that and help me do those things we need to do to address the problems we need to address,” he said.

AL.com has mentioned several times (most recently in the article linked directly above) that “Bentley donated $500,000 of his own money to the state Republican Party in the closing weeks of the campaign to help elect Republicans who he now hopes will remember his role in their wins.”

But Alabama Republican Party Chairman Bill Armistead said the Governor opted instead to spend the money through his own campaign, rather than donating it to the Party.

“The financial disclosure statements filed by the Governor and the Alabama Republican Party will show that the Governor didn’t give $500,000 to the Alabama Republican Party,” he said. “Early in the election cycle, I did discuss with the Governor the Party’s need to raise money for our GOTV (Get Out The Vote) effort and he told me that he planned to spend $500,000 from his own campaign funds to turn out the vote. He said the expenditure would be to purchase TV commercials for his re-election campaign which he believed would turn out the Republican vote.”

The argument could be made that Bentley’s presence at the top of the ticket swung some of the closest races, especially as he stood in contrast to Democrat Parker Griffith, whose campaign was marred by missteps.

But even if some members find his argument compelling, the governor will likely have a difficult time winning support for his proposals as he moves to the left while Republican victories in November resulted in the most conservative Legislature in the state’s history.